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As filed with the Securities and Exchange Commission on August 2, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SPIEKER PROPERTIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
MARYLAND 94-3185802
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
2180 Sand Hill Road
Menlo Park, California 94025
(415) 854-5600
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrar's Principal Executive Offices)
Craig G. Vought
Executive Vice President and Chief Financial Officer
2180 Sand Hill Road
Menlo Park, California 94025
(415) 854-5600
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
COPIES TO:
Stephen J. Schrader, Esq.
Justin L. Bastian, Esq.
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, California 94304
(415) 813-5600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
<CAPTION>
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CALCULATION OF REGISTRATION FEE
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TITLE OF SHARES TO BE AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF REGISTRATION
REGISTERED REGISTERED AGGREGATE PRICE PER SHARE AGGREGATE OFFERING PRICE FEE
- ------------------------- ------------- ------------------------- ------------------------ -----------------------
<S> <C> <C> <C> <C>
Common Stock, $.0001
par value .............. 50,000 shares $28.19032 $1,409,516 $486.04
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) based on the average of the high and low
reported sales prices on the New York Stock Exchange on July 24, 1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE AN AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Subject to Completion
Preliminary Prospectus dated August 1, 1996
PROSPECTUS
50,000 SHARES
SPIEKER PROPERTIES, INC.
COMMON STOCK
This Prospectus relates to the offer and sale from time to time by the
holders of up to 50,000 shares (the "Shares") of common stock, par value $.0001
per share ("Common Stock"), that may be issued by Spieker Properties, Inc. (the
"Company") to certain holders of up to 50,000 units of limited partnership
interest (the "Units") in Spieker Properties, L.P. (the "Operating
Partnership"), of which the Company is the sole general partner and owns a
controlling interest, if and to the extent that such holders tender such Units
for exchange into shares of Common Stock (the "Selling Stockholders"). The
Company is registering the Shares issuable upon conversion of the Units pursuant
to the terms of an Investor Rights Agreement dated November 18, 1993 by and
among the Company and certain holders of Units to provide the holders of Units
with freely tradable securities. The registration of the Shares does not
necessarily mean that any of the Shares will be issued by the Company, unless
required by the holders, or will be offered and sold by the holders thereof. See
"Use of Proceeds" and "Registration Rights."
The Common Stock is listed on the New York Stock Exchange (the "NYSE") under
the symbol "SPK." To ensure that the Company maintains its qualification as a
REIT, ownership by any person is limited to 9.9% of the value of the outstanding
capital stock of the Company, with certain limited exceptions. See "Description
of Capital Stock -- Restrictions on Transfer."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
The Selling Stockholders from time to time may offer and sell the Shares
held by them directly or through agents or broker-dealers on terms to be
determined at the time of sale. To the extent required, the names of any agent
or broker-dealer and applicable commissions or discounts and any other required
information with respect to any particular offer will be set forth in an
accompanying Prospectus Supplement. See "Plan of Distribution." Each of the
Selling Stockholders reserves the sole right to accept or reject, in whole or in
part, any proposed purchase of the Shares to be made directly or through agents.
The Company will not receive any of the proceeds from the issuance of the
Shares or the sale of Shares by the Selling Stockholders but has agreed to bear
certain expenses of registration of the Shares under Federal and state
securities laws. The Company will acquire one Unit in the Operating Partnership
in exchange for each Share that the Company may issue to Unit holders pursuant
to the Registration Statement of which this Prospectus is part.
The Selling Stockholders and any agents or broker-dealers that participate
with the Selling Stockholders in the distribution of Shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and any commissions received by them and any profit on the
resale of the Shares may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Registration Rights" for indemnification
arrangements between the Company and the Selling Stockholders.
The date of this Prospectus is August , 1996
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith the Company files, reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information filed can be inspected and copied at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.,
20549, and at the following regional offices of the Commission: Seven World
Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition, the Common Stock
is listed on the New York Stock Exchange and similar information concerning the
Company can be inspected and copied at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") (of which this Prospectus is a part) under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Offered Securities. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission. Statements
contained in this Prospectus as to the contents of any contract or other
documents are not necessarily complete, and in each instance reference is made
to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto. For further information
regarding the Company and the Shares, reference is hereby made to the
Registration Statement and such exhibits and schedules which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of
the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the Exchange
Act with the Commission and are incorporated herein by reference:
a. The Company's Annual Report on Form 10-K for the year ended December
31, 1995 and Annual Report on Form 10-K/A (Amendment No. 1) for the year
ended December 31, 1995 filed with the Commission on June 20, 1996;
b. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996;
c. The Company's two Current Reports on Form 8-K dated June 18, 1996 and
July 15, 1996; and
d. The description of the Registrant's Common Stock contained in the
Company's Registration Statement on Form 8-A (File No. 1-12528).
Each document filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering made hereby shall be deemed to be incorporated
by reference in this Prospectus and to be part hereof from the date of filing
such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in the applicable Prospectus Supplement) or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such
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statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered upon written or oral request. Requests should be
directed to the Investor Relations Coordinator, Spieker Properties, Inc., 2180
Sand Hill Road, Menlo Park, California 94025, telephone number: (415) 854-5600.
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All references to the "Company" include Spieker Properties, Inc.,
those entities owned or controlled by Spieker Properties, Inc. and predecessors
of Spieker Properties, Inc., unless the context indicates otherwise.
THE COMPANY
Spieker Properties, Inc. (the "Company") is a self-administered and
self-managed equity real estate investment trust ("REIT") that was formed to
continue the business of owning, operating, managing, leasing, acquiring,
developing and redeveloping suburban commercial property previously conducted by
its predecessor, which began operations in 1970. As of March 31, 1996, the
Company owned and operated 134 properties (the "Properties," and each a
"Property"), aggregating approximately 18.0 million rentable square feet and
comprised of 74 industrial Properties, 44 office Properties and 16 retail
Properties. All of the Properties are located in California, and in Washington,
Oregon and Idaho (the "Pacific Northwest"). The Company believes that it is one
of the largest publicly-owned operators, owners and developers of commercial
real estate located in California and the Pacific Northwest. The Company further
believes that California and the Pacific Northwest have a relatively strong and
stable economy and provide significant investment opportunities due to their
Pacific Rim location, well developed transportation infrastructure, high
technology industries, well-educated employee base and excellent universities.
All of the Company's interests in the Properties are held directly or
indirectly by, and substantially all of its operations relating to the
Properties are conducted through, Spieker Properties, L.P. (the "Operating
Partnership"). The Company controls the Operating Partnership as the sole
general partner and, as of March 31, 1996, owned approximately 84.9% of the
partnership interests (the "Units") in the Operating Partnership.
The Company's common stock, par value $.0001 per share (the "Common Stock")
is listed on the New York Stock Exchange under the Symbol "SPK." The Company is
a Maryland corporation and the Operating Partnership is a California limited
partnership. The Operating Partnership was formed in 1993 in connection with the
formation of the Company. The Company's and the Operating Partnership's
executive offices are located at 2180 Sand Hill Road, Menlo Park, California
94025 and telephone number is (415) 854-5600.
TAX STATUS OF THE COMPANY
The Company has elected to be taxed as a REIT under Sections 856 through 860
of the Internal Revenue Code of 1986, as amended (the "Code"). As a REIT, the
Company generally is not subject to Federal income tax on net income that it
distributes to its stockholders. REITs are subject to a number of organizational
and operational requirements, including a requirement that they currently
distribute at least 95% of their taxable income. See "Federal Income Tax
Considerations."
SECURITIES TO BE OFFERED
This Prospectus relates to the offer and sale from time to time by the
holders of up to 50,000 shares of Common Stock (the "Shares") that may be issued
by the Company to certain holders of up to 50,000 Units in the Operating
Partnership, of which the Company is the sole general partner and owns a
controlling interest, if and to the extent that such holders tender such Units
for exchange into shares of Common Stock. The Company is registering the Shares
issuable upon exchange of the Units pursuant to the terms of the Investor Rights
Agreement dated November 18, 1993 by and among the Company and certain holders
of Units to provide the holders of such Units with freely tradable securities.
The Registration of the Shares does not necessarily mean that any of such Shares
will be issued by the Company, unless required by the holders, or will be
offered and sold by the holders thereof.
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USE OF PROCEEDS
The Company will not receive any of the proceeds of the issuance of the
Shares or the sale of Shares by the Selling Stockholders but has agreed to bear
certain expenses of registration of the Shares under Federal and state
securities laws.
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SPECIAL CONSIDERATIONS
Prospective investors should carefully consider the following information in
conjunction with the other information contained in this Prospectus and the
applicable Prospectus Supplement before purchasing the Shares offered hereby.
GENERAL REAL ESTATE INVESTMENT RISKS
Real property investments are subject to varying degrees of risk. The yields
available from investments in real estate depend on the amount of income and
capital appreciation generated by the related properties. If the Properties do
not generate sufficient income to meet operating expenses, including debt
service, ground lease payments, tenant improvements, third-party leasing
commissions and other capital expenditures, the Company's income and ability to
make distributions to its stockholders will be adversely affected. The
performance of the economy in each of the regions in which the Properties are
located affects occupancy, market rental rates and expenses and, consequently,
has an impact on the income from the Properties and their underlying values. The
financial results of major local employers also may have an impact on the cash
flow and value of certain Properties. In terms of rentable square feet, over 45%
of the Properties as of March 31, 1996, were located in the San Francisco Bay
Area. As a result of this geographic concentration, the performance of the San
Francisco Bay Area commercial real estate market will affect the value of the
Properties in that area and, in turn, the value of the Company.
Income from the Properties may be further adversely affected by the general
economic climate, local economic conditions in which the Properties are located,
such as oversupply of space or a reduction in demand for rental space, the
attractiveness of the Properties to tenants, competition from other available
space, the ability of the Company to provide for adequate maintenance and
insurance and increased operating expenses. There is also the risk that as
leases on the Properties expire, tenants will enter into new leases on terms
that are less favorable to the Company. Income and real estate values may also
be adversely affected by such factors as applicable laws (e.g., ADA and tax
laws), interest rate levels and the availability of financing. In addition, real
estate investments are relatively illiquid and, therefore, will tend to limit
the ability of the Company to vary its portfolio promptly in response to changes
in economic or other conditions.
COMPETITION
Numerous industrial, office and retail properties compete with the
Properties in attracting tenants to lease space. Some of these competing
properties are newer, better located or better capitalized than the Company's
Properties. The number of competitive commercial properties in a particular area
could have a material effect on the Company's ability to lease space in the
Properties or at newly developed or acquired properties and on the rents
charged.
ACQUISITION AND DEVELOPMENT ACTIVITIES
The Company intends to acquire existing commercial properties to the extent
that they can be acquired on advantageous terms and meet the Company's
investment criteria. Acquisitions of commercial properties entail general
investment risks associated with any real estate investment, including the risk
that investments will fail to perform as expected or that estimates of the cost
of improvements to bring an acquired property up to standards established for
the intended market position may prove inaccurate.
The Company intends to pursue commercial property development projects and
to develop certain landholdings as to which it has certain options. Such
projects generally require various governmental and other approvals, the receipt
of which cannot be assured. The Company's development activities will entail
certain risks, including the expenditure of funds on and devotion of
management's time to projects which may not
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come to fruition; the risk that construction costs of a project may exceed
original estimates, possibly making the project uneconomic; the risk that
occupancy rates and rents at a completed project will be less than anticipated;
and the risk that expenses at a completed development will be higher than
anticipated. These risks may result in a reduction in the funds available for
distribution.
DEBT FINANCING
The Company will be subject to the risks normally associated with debt
financing, including the risk that the Company's cash flow will be insufficient
to meet required payments of principal and interest, the risk that existing
indebtedness on the Properties cannot be refinanced or that the terms of such
refinancing will not be as favorable as the terms of existing indebtedness.
ENVIRONMENTAL MATTERS
Under various Federal, state and local laws, ordinances and regulations, an
owner or operator of real estate is liable for the costs of removal or
remediation of certain hazardous or toxic substances on or in such property.
Such laws often impose such liability without regard to whether the owner or
operator knew of, or was responsible for, the presence of such hazardous or
toxic substances. The presence of such substances, or the failure to properly
remediate such substances, may adversely affect the owner's or operator's
ability to sell or rent such property or to borrow using such property as
collateral. Persons who arrange for the disposal or treatment of hazardous or
toxic substances may also be liable for the costs of removal or remediation of
such substances at a disposal or treatment facility, whether or not such
facility is owned or operated by such person. Certain environmental laws impose
liability for release of asbestos-containing materials into the air, and third
parties may seek recovery from owners or operators of real properties for
personal injuries associated with asbestos-containing materials. In connection
with the ownership (direct or indirect), operation, management and development
of real properties, the Company may be considered an owner or operator of such
properties or as having arranged for the disposal or treatment of hazardous or
toxic substances and, therefore, may be potentially liable for removal or
remediation costs, as well as certain other costs, including governmental fines
and injuries to persons and property.
The Company is not aware of any environmental liability with respect to the
Properties that would have a material adverse effect on the Company's business,
assets or results of operations. There can be no assurance that such a material
environmental liability does not exist. The existence of any such material
environmental liability would have an adverse effect on the Company's results of
operations and cash flow.
GENERAL UNINSURED LOSSES/SEISMIC ACTIVITY
The Company carries comprehensive liability, fire, flood, extended coverage
and rental loss insurance with policy specifications, limits and deductibles
customarily carried for similar properties. There are, however, certain types of
extraordinary losses which may be either uninsurable, or not economically
insurable. Further, a substantial number of the Properties are located in areas
that are subject to earthquake activity. Although the Company has obtained
certain limited earthquake insurance policies, should a Property sustain damage
as a result of an earthquake, the Company may incur substantial losses due to
insurance deductibles, co-payments on insured losses or uninsured losses.
Additionally, earthquake insurance may not be available for certain of the
Company's Properties, or if available, may not be available on terms acceptable
to the Company. Should an uninsured loss occur, the Company could lose its
investment in, and anticipated profits and cash flows from, a number of
Properties.
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DESCRIPTION OF CAPITAL STOCK
STOCK -- GENERAL
As of March 31, 1996, the total number of shares of all classes of capital
stock that the Company had authority to issue was 1,000,000,000 shares,
consisting of (i) 660,500,000 shares of Common Stock, par value $0.0001 per
share, (ii) 1,000,000 shares of Series A Preferred Stock, par value $0.0001 per
share, (iii) 5,000,000 shares of Series B Cumulative Redeemable Preferred Stock,
par value $0.0001 per share ("Series B Preferred Stock"), (iv) 2,000,000 shares
of Class B Common Stock, par value $0.0001 per share ("Class B Common Stock"),
(v) 1,500,000 shares of Class C Common Stock, par value $0.0001 per share
("Class C Common Stock"), and (vi) 330,000,000 shares of excess stock ("Excess
Stock").
As of March 31, 1996, there were (i) 31,773,361 shares of Common Stock
issued and outstanding, (ii) 1,000,000 shares of Series A Preferred Stock issued
and outstanding, (iii) 4,250,000 shares of Series B Preferred Stock, issued and
outstanding, (iv) 2,000,000 shares of Class B Common Stock issued and
outstanding and (v) 1,176,470 shares of Class C Common Stock issued and
outstanding. At any given time, there are reserved for issuance under the
Spieker Properties, Inc. 1993 Stock Incentive Plan (the "Plan") shares of the
Company's Common Stock equal to 9.9% of the number of shares of the Company's
stock outstanding (including shares of Common Stock issuable upon conversion of
partnership units in the Operating Partnership, Series A Preferred Stock, Class
B Common Stock and Class C Common Stock, and all classes of convertible
securities of the Company that may be issued in the future) as of the last day
of the immediately preceding quarter reduced by the number of shares of Common
Stock reserved for issuance under other stock compensation plans of the Company.
As of June 30, 1996, the Company had reserved for issuance under the Plan
3,450,000 shares of the Company's Common Stock and 150,000 shares of Common
Stock were reserved for issuance under the Spieker Properties, Inc. 1993 Stock
Option Plan. In addition, 1,219,512 shares of Common Stock have been reserved
for issuance under the conversion of the Series A Preferred Stock, 2,531,646
shares of Common Stock have been reserved for issuance upon the conversion of
Class B Common Stock and 1,176,470 shares of Common Stock have been reserved for
issuance upon the conversion of Class C Common Stock. Further, 6,549,819 shares
of Common Stock have been reserved for issuance upon the conversion of limited
partnership units in the Operating Partnership.
COMMON STOCK
The following description of the Common Stock sets forth certain general
terms and provisions of the Common Stock. This description is in all respects
subject to and qualified in its entirety by reference to the applicable
provisions of the Company's Articles of Incorporation and Articles Supplementary
(collectively, the "Charter") and its Bylaws. The Common Stock is listed on the
New York Stock Exchange under the symbol "SPK." Chemical Mellon Shareholder
Services, L.L.C. is the Company's transfer agent.
The holders of the outstanding Common Stock are entitled to one vote per
share on all matters voted on by stockholders, including elections of directors.
The Charter does not provide for cumulative voting in the election of directors.
The shares of Common Stock offered hereby will, when issued, be fully paid
and nonassessable and will not be subject to preemptive or similar rights.
Subject to the preferential rights of the Series A Preferred Stock, Series B
Preferred Stock and any preferential rights of any other outstanding series of
capital stock, the holders of Common Stock are entitled to such distributions as
may be declared from time to time by the Board of Directors from funds available
for distribution to such holders. The Company currently pays regular quarterly
dividends to holders of Common Stock.
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In the event of a liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to receive ratably the assets
remaining after satisfaction of all liabilities and payment of liquidation
preferences and accrued dividends, if any, on Series A Preferred Stock, Series B
Preferred Stock, Class B Common Stock and Class C Common Stock and any other
series of capital stock that has a liquidation preference. The rights of holders
of Common Stock are subject to the rights and preferences established by the
Board of Directors for any capital stock that may subsequently be issued by the
Company.
Subject to limitations prescribed by Maryland law and the Company's Charter,
the Board of Directors is authorized to reclassify any unissued portion of the
authorized shares of capital stock to provide for the issuance of shares in
other classes or series, including other classes or series of Common Stock, to
establish the number of shares in each class or series and to fix the
designation and any preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of such class or series. The rights, preferences,
privileges and restrictions of such class or series will be fixed by the
articles supplementary relating to such class or series.
CLASS B COMMON STOCK
The following description of the Company's Class B Common Stock is in all
respects subject to and qualified in its entirety by reference to the applicable
provisions of the Company's Charter, including the Articles Supplementary
applicable to the Class B Common Stock, and Bylaws. The Company has issued
2,000,000 shares of Class B Common Stock, par value $0.0001 per share, all of
which were outstanding as of September 30, 1995.
The Class B Common Stock ranks on a parity with the Company's Common Stock
with respect to dividends. The Class B Common Stock was sold in May 1995 to a
limited number of institutional investors at a price per share of $25.00. The
initial per share dividend of the Class B Common Stock was set at $2.19, which
was at a rate that was equal to the dividend yield on shares of Common Stock
sold concurrently with the Class B Common Stock plus 0.25 percent. The dividend
per share on the Class B Common stock will be increased or decreased by the same
dollar amount as any increase or decrease in the dividend distributions made to
the holders of Common Stock. The Company currently pays regular dividends to
holders of Class B Common Stock.
In the event of any liquidation, dissolution or winding up of the Company,
the holders of Class B Common Stock are entitled to receive, prior and in
preference to the holders of Common Stock, an amount per share of Class B Common
Stock equal to all declared but unpaid dividends for each share of Class B
Common Stock. The Class B Common Stock has not been registered under the
Securities Act. The institutional investors who purchased the shares of Class B
Common Stock have certain demand registration rights for eight years following
the May 1995 sale of such shares to register in each instance Common Stock
having a market value of $1.0 million or more. Subject to certain limitations,
the Class B Common Stock may be converted into Common Stock three years after
the May 1995 sale or earlier upon the occurrence of certain events including a
change in management. The holders of Class B Common Stock are not entitled to
vote on matters voted on by stockholders of the Company.
CLASS C COMMON STOCK
The following description of the Company's Class C Common Stock is in all
respects subject to and qualified in its entirety by reference to the applicable
provisions of the Company's Charter, including the Articles Supplementary
applicable to the Class C Common Stock, and Bylaws. The Company has issued
1,176,470 shares of Class C Common Stock, par value $0.0001 per share, all of
which were outstanding as of March 31, 1996.
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The Class C Common Stock ranks on a parity with the Company's Common
Stock and Class B Common Stock with respect to dividends. The Class C Common
Stock was sold in March 1996 to an institutional investor at a price per share
of $25.50. The initial per share dividend of the Class C Common Stock was set at
$1.73. The dividend per share on the Class C Common Stock is increased or
decreased by the same dollar amount as any increase or decrease in the dividend
distributions made to the holders of Common Stock. The Company currently pays
regular dividends to the holder of Class C Common Stock.
In the event of any liquidation, dissolution or winding up of the Company,
the holders of Class C Common Stock are entitled to receive, on a parity with
the holders of Class B Common Stock and prior and in preference to the holders
of Common Stock, an amount per share of Class C Common Stock equal to all
declared but unpaid dividends for each share of Class C Common Stock. The Class
C Common Stock has not been registered under the Securities Act. The
institutional investor who purchased the shares of Class C Common Stock has
certain demand registration rights for eight years following the March 1996 sale
of such shares to register in each instance Common Stock having a market value
of $1.0 million or more. Subject to certain limitations, the Class C Common
Stock may be converted into Common Stock three years after the March 1996 sale
or earlier upon the occurrence of certain events including a change in
management. The holders of Class C Common Stock are not entitled to vote on
matters voted on by stockholders of the Company.
SERIES A PREFERRED STOCK
For a description of the Company's Series A Preferred Stock, see
"Description of Series A Preferred Stock."
SERIES B PREFERRED STOCK
The following description of the Company's Series B Preferred Stock is in
all respects subject to and qualified in its entirety by reference to the
applicable provisions of the Charter, including the Company's Articles
Supplementary applicable to the Series B Preferred Stock, and Bylaws. The
Company is authorized to issue 5,000,000 shares of Series B Preferred Stock,
4,250,000 of which were issued and outstanding as of March 31, 1996. The holders
of the Series B Preferred Stock are entitled to receive cumulative, preferential
cash dividends, when and as declared by the Board of Directors, at the rate of
$2.3625 per share. The Company currently pays regular dividends to holders of
Series B Preferred Stock.
In the event of liquidation, dissolution or winding up of the Company, the
holders of Series B Preferred Stock are entitled to receive, on a parity with
the holders of Series A Preferred Stock, prior and in preference to any
distribution to the holders of Common Stock, an amount per share of Series B
Preferred Stock equal to the sum of $25.00 and any accrued but unpaid dividends
with respect thereto. The Company may redeem, subject to certain exceptions,
from any source of funds legally available therefor, on or at any time after
December 11, 2000, any or all outstanding shares of Series B Preferred Stock at
the option of the Company by paying in cash therefor an amount per share equal
to the sum of $25.00 and any accrued but unpaid dividends with respect thereto,
without interest.
The Series B Preferred Stock is not convertible into or exchangeable for any
property or securities of the Company at the option of the holder. However, in
order to preserve the Company's status as a REIT as defined in the Code, shares
of Series B Preferred Stock may be exchanged for Excess Stock. See " --
Restrictions on Transfer." The holders of shares of Series B Preferred Stock
have no voting rights with respect to matters voted upon by the holders of
shares of Common Stock.
RESTRICTIONS ON TRANSFER
For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding stock may be owned, directly or indirectly, by five or
fewer individuals (as defined in the Code) during the last half of a taxable
year, the stock must be beneficially owned by 100 or more persons during at
least 335 days of a
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<PAGE> 12
taxable year of 12 months or during a proportionate part of a shorter taxable
year and certain percentages of the Company's gross income must be from
particular activities (see "Federal Income Tax Considerations -- Requirements
for Qualification -- Gross Income Tests"). To enable the Company to continue to
qualify as a REIT, the Charter restricts the acquisition of shares of common
stock and preferred stock.
The Charter provides that, subject to certain exceptions specified in the
Charter, no stockholder may own, or be deemed to own by virtue of the
attribution provisions of the Code, more than 9.9% of the value of the
outstanding common stock and preferred stock (the "Ownership Limit"). The Board
of Directors may waive the Ownership Limit if evidence satisfactory to the Board
of Directors and the Company's tax counsel is presented that such ownership will
not jeopardize the Company's status as a REIT. As a condition to such waiver,
the Board of Directors may require opinions of counsel satisfactory to it and/or
an undertaking from the applicant with respect to preserving the REIT status of
the Company. The Ownership Limit will not apply if the Board of Directors and
the stockholders of the Company determine that it is no longer in the best
interests of the Company to attempt to qualify, or to continue to qualify, as a
REIT. If shares of common stock or preferred stock in excess of the Ownership
Limit, or shares which would cause the Company to be beneficially owned by fewer
than 100 persons or cause the Company to become "closely held" under Section
856(h) of the Code, are issued or transferred to any person, such issuance or
transfer shall be null and void and the intended transferee will acquire no
rights to such shares.
The Charter also provides that shares involved in a transfer or change in
capital structure that results in a person owning in excess of the Ownership
Limit or would cause the Company to become "closely held" within the meaning of
Section 856(h) of the Code will automatically be exchanged for Excess Stock. All
Excess Stock will be transferred, without action by the stockholder, to the
Company as trustee of a trust for the exclusive benefit of the transferee or
transferees to whom the Excess Stock is ultimately transferred. While the Excess
Stock is held in trust, it will not be entitled to vote, it will not be
considered for purposes of any stockholder vote or the determination of a quorum
for such vote and it will not be entitled to participate in any distributions
made by the Company, except upon liquidation. The Company would have the right,
for a period of 90 days during the time the Excess Stock is held by the Company
in trust, to purchase all or any portion of the Excess Stock from the intended
transferee at the lesser of the price paid for the stock by the intended
transferee and the closing market price for the stock on the date the Company
exercises its option to purchase.
The Ownership Limit provision of the Charter will not be automatically
removed even if the real estate investment trust provisions of the Code are
changed so as to no longer contain any ownership concentration limitation or if
the ownership concentration limitation is increased. Except as otherwise
described above, any change in the Ownership Limit would require an amendment to
the Charter. Such amendments to the Charter require the affirmative vote of
holders owning a majority of the total number of shares of all classes of stock
outstanding and entitled to vote thereon. In addition to preserving the
Company's status as a REIT, the Ownership Limit may have the effect of
precluding an acquisition of control of the Company without the approval of the
Board of Directors.
All certificates representing shares of common stock and preferred stock
will bear a legend referring to the restrictions described above.
All persons who own of record, more than 5% of the outstanding common stock and
preferred stock (or 1% if there are fewer than 2,000 stockholders or one-half of
1% if there are 200 or less stockholders) must file an affidavit with the
Company containing the information specified in the Charter within 30 days after
January 1 of each year. In addition, each stockholder shall upon demand be
required to disclose to the Company in writing such information with respect to
the direct, indirect and constructive ownership of shares as the Board of
Directors deems necessary to determine the Company's status as a real estate
investment trust and to insure compliance with the Ownership Limit.
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<PAGE> 13
DESCRIPTION OF SERIES A PREFERRED STOCK
The following description of the Company's Series A Preferred Stock is in
all respects subject to and qualified in its entirety by reference to the
applicable provisions of the Company's Charter, including the Articles
Supplementary applicable to the Series A Preferred Stock and the Bylaws. The
Company is authorized to issue 1,000,000 shares of Series A Preferred Stock, all
of which were issued and outstanding as of March 31, 1996 and held of record by
one private investor. The Series A Preferred Stock ranks senior to the Company's
Common Stock, Class B Common Stock and Class C Common Stock as to dividends and
liquidation amounts. The dividend per share on the Series A Preferred Stock is
equal to the dividend per share on the Common Stock as multiplied by the number
of shares of Common Stock into which each share of Series A Preferred Stock is
convertible, provided that the dividend rate on the Series A Preferred Stock may
not be less than the initial dividend rate thereof. The dividends on the Series
A Preferred Stock are cumulative. The Company currently pays regular dividends
to holders of Series A Preferred Stock.
In the event of any liquidation, dissolution or winding up of the Company,
the holders of Series A Preferred Stock are entitled to receive, prior and in
preference to any distribution to the holders of Series B Preferred Stock, prior
and in preference to any distribution to the holders of Common Stock, Class B
Common Stock and Class C Common Stock, an amount per share of Series A Preferred
Stock equal to the sum of $25.00 and any accrued but unpaid dividends with
respect thereto. The Company may redeem, subject to certain exceptions, from any
source of funds legally available therefor, on or at any time after May 13,
1999, any or all outstanding shares of Series A Preferred Stock at the option of
the Company by paying in cash therefor an amount per share equal to the sum of
$25.00 and any accrued but unpaid dividends with respect thereto.
Each share of Series A Preferred Stock is convertible, at the option of the
holder thereof at any time prior to a redemption date, into shares of Common
Stock based on a certain formula. Under such formula, the 1,000,000 outstanding
shares of Series A Preferred Stock are convertible into 1,219,512 shares of
Common Stock. The holder of each share of Series A Preferred Stock has the right
to one vote for each share of Common Stock into which such Series A Preferred
Stock can be converted, and with respect to such vote, such holder has the
voting rights and powers of the holders of each share of Common Stock, and is
entitled to notice of any stockholders' meeting in accordance with the Bylaws of
the Company, and is entitled to vote, together with holders of Common Stock,
with respect to any question upon which holders of Common Stock have the right
to vote.
DESCRIPTION OF PARTNERSHIP UNITS
Substantially all of the Company's assets are held by, and all of its
operations are conducted through, the Operating Partnership. The Company is the
sole general partner of the Operating Partnership and as of March 31, 1996 held
approximately 84.9% of the Units therein. The remaining Units are held by
persons (or their successors) who contributed interests in the Properties to the
Company in connection with, or subsequent to, the formation of the Operating
Partnership. The following sets forth a description of certain terms and
provisions of the Units and does not purport to be complete and is subject to
and qualified in its entirety by reference to applicable provisions of
California law and the First Amended and Restated Agreement of Limited
Partnership of Spieker Properties, L.P., as amended (the "Partnership
Agreement").
GENERAL
Holders of Units (other than the Company) hold limited partnership
interests in the Operating Partnership, and all holders of Units (including the
Company in its capacity as general partner) are entitled to share in cash
distributions from, and in the profits and losses of, the Operating Partnership.
The Company holds its entire interest in the Operating Partnership in the form
of a general partnership interest.
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<PAGE> 14
Holders of Units have the rights to which limited partners are
entitled under the Partnership Agreement and the California Revised Uniform
Limited Partnership Act. The Units have not been registered pursuant to the
federal or state securities laws and have not been listed on any exchange or
quoted on any national market system. The Partnership Agreement restricts the
transfer of Units, as described below.
RESTRICTIONS ON TRANSFER OF UNITS BY LIMITED PARTNERS
The limited partners in the Operating Partnership (the "Limited
Partners") who were executive officers of the Company at the time of the
formation of the Operating Partnership are prohibited from transferring all or a
portion of their Units prior to November 18, 1996 without obtaining the prior
consent of the Company, which consent may be withheld in the sole and absolute
discretion of the Company. The other original Limited Partners of the Company
are prohibited from transferring more than fifty percent (50%) of their Units
prior to November 18, 1996 without obtaining the prior consent of the Company,
which consent may be withheld in the sole and absolute discretion of the
Company. Notwithstanding these restrictions, the Limited Partners are permitted
to transfer all or a portion of their Units prior to such date to affiliates, to
other partners and in accordance with an employee benefit plan of the Company,
the Merit Plan. Following such date, and subject to compliance with certain
other requirements set forth in the Partnership Agreement, each Limited Partner
will have the right to transfer all or a portion of its Units without
restriction.
EXCHANGE OF UNITS
Subject to certain limitations, Limited Partners may require that the
Operating Partnership convert a portion of their Units in the Operating
Partnership into shares of Common Stock issued by the Company (the "Conversion
Component") and to sell to the Company for cash the remainder of their Units in
the Operating Partnership (the "Sale Component"). The Conversion Component
enables a Limited Partner to convert his or her Units in the Operating
Partnership into shares of Common Stock until he or she owns up to 9.9% of the
outstanding Common Stock. The Sale Component, which can only be exercised if the
Limited Partner already owns 9.9% or more of the outstanding Common Stock,
enables the Limited Partner to sell all or a portion of his or her remaining
interests in the Operating Partnership to the Company for cash or Common Stock,
or a combination thereof, at the Company's election.
SHARES AVAILABLE FOR FUTURE SALE
As of March 31, 1996, there were (i) 31,773,361 shares of Common Stock
issued and outstanding, (ii) 1,000,000 shares of Series A Preferred Stock issued
and outstanding, (iii) 4,250,000 shares of Series B Preferred Stock, issued and
outstanding, (iv) 2,000,000 shares of Class B Common Stock issued and
outstanding and (v) 1,176,470 shares of Class C Common Stock issued and
outstanding. At any given time, there are reserved for issuance under the
Spieker Properties, Inc. 1993 Stock Incentive Plan (the "Plan") shares of the
Company's Common Stock equal to 9.9% of the number of shares of the Company's
stock outstanding (including shares of Common Stock issuable upon conversion of
partnership units in the Operating Partnership, Series A Preferred Stock, Class
B Common Stock and Class C Common Stock, and all classes of convertible
securities of the Company that may be issued in the future) as of the last day
of the immediately preceding quarter reduced by the number of shares of Common
Stock reserved for issuance under other stock compensation plans of the Company.
There are also reserved for issuance under the Plan 150,000 shares of Common
Stock. In addition, 1,219,512 shares of Common Stock have been reserved for
issuance under the conversion of the Series A Preferred Stock, 2,531,646 shares
of Common Stock have been reserved for issuance upon the conversion of Class B
Common Stock and 1,176,470 shares of Common Stock have been reserved for
issuance upon the conversion of Class C Common Stock. Further, 6,549,819 shares
of Common Stock have been reserved for issuance upon the conversion of limited
partnership units in the Operating Partnership.
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<PAGE> 15
In certain circumstances, holders of Shares may elect to sell their
shares in accordance with the exemptions provided by Rule 144 under the
Securities Act rather than pursuant to this Prospectus. In general, under Rule
144 as currently in effect, a person (or persons whose shares are aggregated in
accordance with the Rule) who has beneficially owned his or her shares for at
least two years, as well as any persons who may be deemed "affiliates" of the
Company (as defined in the Securities Act), would be entitled to sell within any
three month period a number of shares of Common Stock that does not exceed the
greater of 1% of the then outstanding number of shares or the average weekly
trading volume of the shares during the four calendar weeks preceding each such
sale. After shares are held for three years, a person who is not deemed an
"affiliate" of the Company is entitled to sell such shares under Rule 144
without regard to the volume limitations. As defined in Rule 144, an "affiliate"
of an issuer is a person that directly or indirectly, through the use of one or
more intermediaries, controls, or is controlled by, or is under common control
with, such issuer.
In addition, pursuant to registration statements on Form S-3 (Nos.
33-98372 and 333-04299) that the Company and the Operating Partnership have
filed as co-registrants (the "Company's Shelf Registration Statements"), the
Company may offer and sell shares of Common Stock (or securities convertible
into or exercisable for shares of Common Stock), together or separately, and in
amounts, at prices and on terms to be determined at the time of sale, up to an
aggregate initial offering price not to exceed approximately $392,113,750.
Shares of Common Stock offered and sold pursuant to the Company's Shelf
Registration Statement may be tradable without restriction under the Securities
Act (subject to the Ownership Limit).
As of March 31, 1996, pursuant to the Plan, options to purchase
1,764,500 shares of Common Stock have been granted or authorized to be granted
to the Company's officers and certain key employees and 469,000 additional
shares of Common Stock were reserved for future issuance under the Option Plan.
No prediction can be made as to the effect, if any, that future sales
of shares of Common Stock, or the availability of shares for future sale, will
have on the market price prevailing from time to time. Sales of substantial
amounts of shares of Common Stock (including shares issued upon the redemption
of Units or the exercise of options), or the perception that such sales could
occur, could adversely affect prevailing market price of the shares.
REGISTRATION RIGHTS
The Company has filed the Registration Statement of which this
Prospectus is a part pursuant to its obligations under the Investor Rights
Agreement dated November 18, 1993 by and among the Company and certain holders
of Units (the "Limited Partners' Investors' Rights Agreement"). The following
summary does not purport to be complete and is qualified in its entirety by
reference to the Limited Partners' Investors' Rights Agreement.
Under the Limited Partners' Investors' Rights Agreement, the Company
agreed to pay all expenses of effecting the registration of the Shares (other
than underwriting discounts and commissions, fees and disbursements of counsel
retained by Limited Partners, and transfer taxes, if any) pursuant to the
Registration Statement. Pursuant to the Registration Rights Agreements, the
Company also agreed to indemnify each holder of Shares and any person who
controls any holder against certain losses, claims, damages and expenses arising
under the securities laws. In addition, each holder of Shares agreed to
indemnify the Company and the other holders of Shares, and the directors and
officers of the Company (including each director and officer of the Company who
signed the Registration Statement), and any person who controls the Company or
any holder against certain other losses, claims damages and expenses arising
under the securities laws with respect to written information furnished to the
Company by such holder.
The Company has no obligation under the Registration Rights Agreements
to retain any underwriter to effect the sale of the shares covered thereby.
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<PAGE> 16
SELLING STOCKHOLDERS
The following table provides the names of and the number and percentage
of shares of Common Stock beneficially owned by each Selling Stockholder and
number and percentage of shares of Common Stock beneficially owned by each
Selling Stockholder upon completion of the offering, assuming each Selling
Stockholder exchanges and converts all of his or her Units for shares of Common
Stock and sells all of his or her Shares pursuant to this Prospectus. Since the
Selling Stockholders may sell all, or some or none of their Shares, no estimate
can be made of the aggregate number of Shares that are to be offered hereby or
that will be owned by each Selling Stockholder upon completion of the offering
to which this Prospectus relates. The number of Shares in the following table
represents the number of shares of Common Stock the person holds (if any) plus
the number of Shares into which Units held by the person may be exchanged or
converted, and the extent to which the person holds Units as opposed to shares
of Common Stock (if known) is set forth in the notes to the following table.
The Shares offered by this Prospectus may be offered from time to time
by the Selling Stockholders named below:
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering (1) After the Offering(1)
---------------------------------- --------------------------------
Percentage of Percentage of
Number of Shares Number of Shares Number of Shares
Shares (1) Outstanding(1) Offered Hereby Shares(1) Outstanding(1)
-------------- ---------------- -------------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Donald S. Jefferson(2)........ 242,666 * 25,000 217,666 *
Richard Romney(3)............. 120,988 * 25,000 95,988 *
</TABLE>
- --------------
*less than 1%
(1) Assumes exchange of all Units for shares of Common Stock into shares of
Common Stock.
(2) Mr. Jefferson is Regional Senior Vice President - Washington/Idaho. Mr.
Jefferson beneficially owns 233,521 Units, 1,179 shares of Common Stock, 7,386
shares of Common Stock held in the name of the Jefferson Family Trust of which
Mr. Jefferson is co-trustee and options to purchase 72,500 shares of Common
Stock, 46,875 shares of which have vested as of July 25, 1996. Options held by
Mr. Jefferson are not included in the above table. This Registration Statement
covers 25,000 shares of Common Stock issuable upon exchange of 25,000 Units
beneficially owned by Mr. Jefferson; it does not cover the 217,666 shares of
Common Stock issuable upon exchange of the remaining 217,666 Units beneficially
owned by Mr. Jefferson. Includes 580 shares of Common Stock held by Mr.
Jefferson as custodian for Alexandra Jefferson. Mr. Jefferson may be deemed to
have beneficial ownership of such 580 shares.
(3) Mr. Romney is Senior Vice President-San Diego. Mr. Romney beneficially owns
120,988 Units and options to purchase 57,500 shares of Common Stock, 39,375
shares of which have vested as of July 25, 1996. Options held by Mr. Romney are
not included in the above table. The Registration Statement covers 25,000 shares
of Common Stock issuable upon exchange of 25,000 Units beneficially owned by Mr.
Romney; it does not cover the 120,988 shares of Common Stock issuable upon
exchange of the remaining 95,988 Units beneficially owned by Mr. Romney.
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<PAGE> 17
CERTAIN PROVISIONS OF THE COMPANY'S CHARTER AND BYLAWS
Certain provisions of the Company's Charter and Bylaws might discourage
certain types of transactions that involve an actual or threatened change of
control of the Company. The Ownership Limit may delay or impede a transaction or
a change in control of the Company that might involve a premium price for the
Company's capital stock or otherwise be in the best interest of the
stockholders. See "Description of Capital Stock -- Restrictions on Transfer."
Pursuant to the Company's Charter and Bylaws, the Company's Board of Directors
is divided into three classes of directors, each class serving staggered
three-year terms. The staggered terms of directors may reduce the possibility of
a tender offer or an attempt to change control of the Company. The issuance of
preferred stock by the Board of Directors may also have the effect of delaying,
deferring or preventing a change in control of the Company. See "Description of
Capital Stock."
FEDERAL INCOME TAX CONSIDERATIONS
The following summary of material Federal income tax considerations is
based on current law and does not purport to deal with all aspects of taxation
that may be relevant to particular stockholders in light of their personal
investment or tax circumstances, or to certain types of stockholders (including
insurance companies, financial institutions and broker-dealers) subject to
special treatment under the Federal income tax laws. Certain Federal Income Tax
Considerations relevant to holders of the Offered Securities will be provided in
the applicable Prospectus Supplement relating thereto.
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT HIS OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OF THE PURCHASE, OWNERSHIP AND
SALE OF THE OFFERED SECURITIES.
GENERAL
The Company believes that since its formation it has operated in a manner
that permits it to satisfy the requirements for taxation as a REIT under the
applicable provisions of the Code. The Company intends to continue to operate to
satisfy such requirement. No assurance can be given, however, that such
requirements will be met.
The sections of the Code relating to qualification and operation as a
REIT are highly technical and complex. The following sets forth the material
aspects of the Code sections that govern the Federal income tax treatment of a
REIT and its stockholders. This summary is qualified in its entirety by the
applicable Code provisions, rules and regulations thereunder, and
administrative and judicial interpretations thereof. Morrison & Foerster LLP
has acted as tax counsel to the Company in connection with the Company's
election to be taxed as a REIT.
In the opinion of Morrison & Foerster LLP, commencing with the Company's
taxable year ended December 31, 1993, the Company has been organized in
conformity with the requirements for qualification as a REIT, and its method of
operation has and will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Code. It must be emphasized that
this opinion is based on various assumptions and is conditioned upon certain
representations made by the Company as to factual matters. Moreover, such
qualification and taxation as a REIT depends upon the Company's ability to meet,
through actual annual operating results, distribution levels and diversity of
stock ownership, the various qualification tests imposed under the Code
discussed below, the results of which will not be reviewed by Morrison &
Foerster LLP. Accordingly, no assurance can be given that the actual results
of the Company's operations for any particular taxable year will satisfy such
requirements. See " -- Failure to Qualify."
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<PAGE> 18
In brief, if certain detailed conditions imposed by the REIT provisions of
the Code are met, entities, such as the Company, that invest primarily in real
estate and that otherwise would be treated for Federal income tax purposes as
corporations, are generally not taxed at the corporate level on their "REIT
taxable income" that is currently distributed to stockholders. This treatment
substantially eliminates the "double taxation" (i.e., taxation at both the
corporate and stockholder levels) that generally results from the use of
corporate investment vehicles.
If the Company fails to qualify as a REIT in any year, however, it will be
subject to Federal income tax as if it were a domestic corporation, and its
stockholders will be taxed in the same manner as stockholders of ordinary
corporations. In this event, the Company could be subject to potentially
significant tax liabilities and the amount of cash available for distribution to
its stockholders could be reduced.
TAXATION OF THE COMPANY
In any year in which the Company qualifies as a REIT, in general it will
not be subject to Federal income tax on that portion of its net income that it
distributes to stockholders. This treatment substantially eliminates the "double
taxation" on income at the corporate and stockholder levels that generally
results from investment in a corporation. However, the REIT will be subject to
federal income tax as follows: First, the REIT will be taxed at regular
corporate rates on any undistributed real estate investment trust taxable
income, including undistributed net capital gains. Second, under certain
circumstances, the REIT may be subject to the "alternative minimum tax" on its
items of tax preference. Third, if the REIT has (i) net income from the sale or
other disposition of "foreclosure property" which is held primarily for sale to
customers in the ordinary course of business or (ii) other nonqualifying income
from foreclosure property, it will be subject to tax at the highest corporate
rate on such income. Fourth, if the REIT has net income from prohibited
transactions (which are, in general, certain sales or other dispositions of
property held primarily for sale to customers in the ordinary course of business
other than foreclosure property), such income will be subject to a 100% tax.
Fifth, if the REIT should fail to satisfy the 75% gross income test or the 95%
gross income test (as discussed below), and has nonetheless maintained its
qualification as a real estate investment trust because certain other
requirements have been met, it will be subject to a 100% tax on the net income
attributable to the greater of the amount by which the REIT fails the 75% or 95%
test. Sixth, if the REIT should fail to distribute during each calendar year at
least the sum of (i) 85% of its real estate investment trust ordinary income for
such year, (ii) 95% of its real estate investment trust capital gain net income
for such year, and (iii) any undistributed taxable income from prior periods,
the REIT would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed. Seventh, if the REIT
acquires any asset from a C corporation (i.e., generally a corporation subject
to full corporate-level tax) in a transaction in which the basis of the asset in
the REIT's hands is determined by reference to the basis of the asset (or any
other property) in the hands of the C corporation, and the REIT recognizes gain
on the disposition of such asset during the 10 year period beginning on the date
on which such asset was acquired by the REIT, then, to the extent of any
built-in gain at the time of acquisition, such gain will be subject to tax at
the highest regular corporate rate, assuming the REIT will make an election
pursuant to IRS Notice 88-19.
REQUIREMENTS FOR QUALIFICATION
The Code defines a real estate investment trust as a corporation, trust or
association (1) which is managed by one or more trustees or directors; (2) the
beneficial ownership of which is evidenced by transferable shares, or by
transferable certificates of beneficial interest; (3) which would be taxable as
a domestic corporation, but for Sections 856 through 860 of the Code; (4) which
is neither a financial institution nor an insurance company subject to certain
provisions of the Code; (5) the beneficial ownership of which is held by 100 or
more persons; (6) not more than 50% in value of the outstanding stock of which
is owned, directly or indirectly, by five or fewer individuals (as defined in
the Code) at any time during the last half of each taxable year; and (7) which
meets certain other tests, described below, regarding the nature of income and
assets. The Code provides that conditions (1) to (4), inclusive, must be met
during the entire taxable year and that condition (5) must be met during at
least 335 days of a taxable year of 12 months, or during a
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<PAGE> 19
proportionate part of a taxable year of less than 12 months. Conditions (5) and
(6) will not apply until after the first taxable year for which an election is
made by the Company to be taxed as a REIT.
In order to ensure compliance with the ownership tests described above, the
Company has placed certain restrictions on the transfer of the common stock and
preferred stock to prevent further concentration of stock ownership. Moreover,
to evidence compliance with these requirements, the Company must maintain
records which disclose the actual ownership of its outstanding common stock and
preferred stock. In fulfilling its obligations to maintain records, the Company
must and will demand written statements each year from the record holders of
designated percentages of its common stock and preferred stock disclosing the
actual owners of such common stock and preferred stock. A list of those persons
failing or refusing to comply with such demand must be maintained as part of the
Company's records. A stockholder failing or refusing to comply with the
Company's written demand must submit with his tax returns a similar statement
disclosing the actual ownership of common stock and preferred stock and certain
other information. In addition, the Company's Charter provides restrictions
regarding the transfer of its shares that are intended to assist the Company in
continuing to satisfy the share ownership requirements. See "Description of
Capital Stock -- Restrictions on Transfer."
In the case of a REIT that is a partner in a partnership, Treasury
Regulations provide that the REIT will be deemed to own its proportionate share
of the assets of the partnership and will be deemed to be entitled to the income
of the partnership attributable to such share. In addition, the character of the
assets and gross income of the partnership shall retain the same character in
the hands of the REIT for purposes of Section 856 of the Code, including
satisfying the gross income tests and the asset tests, described below. Thus,
the Company's proportionate share of the assets, liabilities and items of income
of the Operating Partnership will be treated as assets, liabilities and items of
income of the Company for purposes of applying the requirements described below.
ASSET TESTS
At the close of each quarter of the Company's taxable year, the Company
must satisfy two tests relating to the nature of its assets. First, at least 75%
of the value of the Company's total assets must be represented by interests in
real property, interests in mortgages on real property, shares in other REITs,
cash, cash items and government securities (as well as certain temporary
investments in stock or debt instruments purchased with the proceeds of new
capital raised by the Company). Second, although the remaining 25% of the
Company's assets generally may be invested without restriction, securities in
this class may not exceed either (i) 5% of the value of the Company's total
assets as to any one nongovernment issuer, or (ii) 10% of the outstanding voting
securities of any one issuer. The Company's investment in the Properties through
its interest in the Operating Partnership constitutes qualified assets for
purposes of the 75% asset test. In addition, the Company may own 100% of
"qualified REIT subsidiaries" as defined in the Code. All assets, liabilities,
and items of income, deduction, and credit of such a qualified REIT subsidiary
will be treated as owned and realized directly by the Company. The Company's
investment in Spieker Northwest, Inc. is not a qualifying asset for purposes of
the 75% test. The Company expects, however, that such investment will continue
to represent less than 5% of the Company's total assets and, together with any
other nonqualifying assets, will continue to represent less than 25% of the
Company's total assets.
GROSS INCOME TESTS
There are three separate percentage tests relating to the sources of the
Company's gross income which must be satisfied for each taxable year. For
purposes of these tests, where the Company invests in a partnership, the Company
will be treated as receiving its share of the income and loss of the
partnership, and the gross income of the partnership will retain the same
character in the hands of the Company as it has in the hands of the partnership.
See "-- Tax Aspects of the Company's Investment in the Operating Partnership --
General."
The 75% Test. At least 75% of the Company's gross income for the taxable
year must be "qualifying income." Qualifying income generally includes (i) rents
from real property (except as modified below);
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(ii) interest on obligations collateralized by mortgages on, or interests in,
real property; (iii) gains from the sale or other disposition of interests in
real property and real estate mortgages, other than gain from property held
primarily for sale to customers in the ordinary course of the Company's trade or
business ("dealer property"); (iv) dividends or other distributions on shares in
other REITs, as well as gain from the sale of such shares; (v) abatements and
refunds of real property taxes; (vi) income from the operation, and gain from
the sale, of property acquired at or in lieu of a foreclosure of the mortgage
collateralized by such property ("foreclosure property"); and (vii) commitment
fees received for agreeing to make loans collateralized by mortgages on real
property or to purchase or lease real property.
Rents received from a tenant will not, however, qualify as rents from real
property in satisfying the 75% test (or the 95% gross income test described
below) if the Company, or an owner of 10% or more of the Company, directly or
constructively owns 10% or more of such tenant (a "related party tenant"). In
addition, if rent attributable to personal property, leased in connection with a
lease of real property, is greater than 15% of the total rent received under the
lease, then the portion of rent attributable to such personal property will not
qualify as rents from real property. Moreover, an amount received or accrued
generally will not qualify as rents from real property (or as interest income)
for purposes of the 75% and 95% gross income tests if it is based in whole or in
part on the income or profits of any person. Rent or interest will not be
disqualified, however, solely by reason of being based on a fixed percentage or
percentages of receipts or sales. Finally, for rents received to qualify as
rents from real property, the Company generally must not operate or manage the
property or furnish or render services to tenants, other than through an
"independent contractor" from whom the Company derives no revenue. The
"independent contractor" requirement, however, does not apply to the extent that
the services provided by the Company are "usually or customarily rendered" in
connection with the rental of space for occupancy only, and are not otherwise
considered "rendered to the occupant."
The Company, through the Operating Partnership (which will not be an
independent contractor), will provide certain services with respect to the
Properties and any newly acquired Properties. The Company believes that the
services provided by the Operating Partnership are usually or customarily
rendered in connection with the rental of space of occupancy only, and therefore
that the provision of such services will not cause the rents received with
respect to the Properties to fail to qualify as rents from real property for
purposes of the 75% and 95% gross income tests. The Company does not intend to
rent to related party tenants or to charge rents that would not qualify as rents
from real property because the rents are based on the income or profits of any
person (other than rents that are based on a fixed percentage or percentages of
receipts or sales).
The 95% Test. In addition to deriving 75% of its gross income from the
sources listed above, at least 95% of the Company's gross income for the taxable
year must be derived from the above-described qualifying income, or from
dividends, interest or gains from the sale or disposition of stock or other
securities that are not dealer property. Dividends and interest on any
obligation not collateralized by an interest on real property are included for
purposes of the 95% test, but not for purposes of the 75% test. For purposes of
determining whether the Company complies with the 75% and 95% income tests,
gross income does not include income from prohibited transactions. A "prohibited
transaction" is a sale of dealer property, excluding certain property held by
the Company for at least four years and foreclosure property. See "-- Taxation
of the Company" and "-- Tax Aspects of the Company's Investment in the Operating
Partnership -- Sale of the Properties."
The Company believes that it and the Operating Partnership has held and
managed the Properties in a manner that has given rise to rental income
qualifying under the 75% and 95% gross income tests. Gains on sales of the
Properties will generally qualify under the 75% and 95% gross income tests.
Even if the Company fails to satisfy one or both of the 75% or 95% gross
income tests for any taxable year, it may still qualify as a REIT for such year
if it is entitled to relief under certain provisions of the Code. These relief
provisions will generally be available if: (i) the Company's failure to comply
was due to reasonable cause and not to willful neglect; (ii) the Company reports
the nature and amount of each item of its income included in the 75% and 95%
gross income tests on a schedule attached to its tax return; and (iii) any
incorrect information on this schedule is not due to fraud with intent to evade
tax. It is not possible, however, to state whether in all circumstances the
Company would be entitled to the benefit of these relief
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<PAGE> 21
provisions. If these relief provisions apply, the Company will, however, still
be subject to a special tax upon the greater of the amount by which it fails
either the 75% or 95% gross income test for that year.
The 30% Test. The Company must derive less than 30% of its gross income for
each taxable year from the sale or other disposition of (i) real property held
for less than four years (other than foreclosure property and involuntary
conversions), (ii) stock or securities held for less than one year, and (iii)
property in a prohibited transaction. The Company does not anticipate that it
will have any substantial difficulty in complying with this test.
ANNUAL DISTRIBUTION REQUIREMENTS
The Company, in order to qualify as a REIT, is required to distribute
dividends (other than capital gain dividends) to its stockholders each year in
an amount at least equal to (A) the sum of (i) 95% of the Company's REIT taxable
income (computed without regard to the dividends paid deduction and the REIT's
net capital gain) and (ii) 95% of the net income (after tax), if any, from
foreclosure property, minus (B) the sum of certain items of non-cash income.
Such distributions must be paid in the taxable year to which they relate, or in
the following taxable year if declared before the Company timely files its tax
return for such year and if paid on or before the first regular dividend payment
after such declaration. To the extent that the Company does not distribute all
of its net capital gain or distributes at least 95%, but less than 100%, of its
REIT taxable income, as adjusted, it will be subject to tax on the undistributed
amount at regular capital gains or ordinary corporate tax rates, as the case may
be. Furthermore, if the REIT should fail to distribute during each calendar year
at least the sum of (i) 85% of its REIT ordinary income for such year, (ii) 95%
of its REIT capital gain income for such year, and (iii) any undistributed
taxable income from prior periods, the REIT would be subject to a 4% excise tax
on the excess of such required distribution over the amounts actually
distributed.
The Company believes that it has made timely distributions sufficient to
satisfy the annual distribution requirements. In this regard, the partnership
agreement of the Operating Partnership authorizes the Company, as general
partner, to take such steps as may be necessary to cause the Operating
Partnership to distribute to its partners an amount sufficient to permit the
Company to meet these distribution requirements. It is possible that in the
future the Company may not have sufficient cash or other liquid assets to meet
the 95% distribution requirement, due to timing differences between the actual
receipt of income and actual payment of expenses on the one hand, and the
inclusion of such income and deduction of such expenses in computing the
Company's REIT taxable income on the other hand. Further, as described below, it
is possible that, from time to time, the Company may be allocated a share of net
capital gain attributable to the sale of depreciated property that exceeds its
allocable share of cash attributable to that sale. To avoid any problem with the
95% distribution requirement, the Company will closely monitor the relationship
between its REIT taxable income and cash flow and, if necessary, will borrow
funds (or cause the Operating Partnership or other affiliates to borrow funds)
in order to satisfy the distribution requirement. The Company (through the
Operating Partnership) may be required to borrow funds at times when market
conditions are not favorable.
If the Company fails to meet the 95% distribution requirement as a result
of an adjustment to the Company's tax return by the Service, the Company may
retroactively cure the failure by paying a "deficiency dividend" (plus
applicable penalties and interest) within a specified period.
FAILURE TO QUALIFY
If the Company fails to qualify for taxation as a REIT in any taxable year
and the relief provisions do not apply, the Company will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to stockholders in any year in which the
Company fails to qualify will not be deductible by the Company, nor will they be
required to be made. In such event, to the extent of the Company's current and
accumulated earnings and profits, all distributions to stockholders will be
taxable as ordinary income, and, subject to certain limitations in the Code,
corporate distributees may be eligible for the dividends received deduction.
Unless entitled to relief under specific statutory provisions, the Company also
will be disqualified from taxation as a REIT for the four taxable years
following the year during
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which qualification was lost. It is not possible to state whether the Company
would be entitled to such statutory relief.
TAX ASPECTS OF THE COMPANY'S INVESTMENT IN THE OPERATING PARTNERSHIP
The following discussion summarizes certain Federal income tax
considerations applicable solely to the Company's investment in the Operating
Partnership. The discussion does not cover state or local tax laws or any
Federal tax laws other than income tax laws.
GENERAL
The Company holds a direct ownership interest in the Operating Partnership.
In general, partnerships are "pass-through" entities which are not subject to
Federal income tax. Rather, partners are allocated their proportionate shares of
the items of income, gain, loss, deduction and credit of a partnership, and are
potentially subject to tax thereon, without regard to whether the partners
receive a distribution from the partnership. The Company includes its
proportionate share of the foregoing Operating Partnership items for purposes of
the various REIT income tests and in the computation of its REIT taxable income.
See "-- Taxation of the Company" and "-- Requirements for Qualification -- Gross
Income Tests." Any resultant increase in the Company's REIT taxable income
increases its distribution requirements (see "-- Requirements for
Qualification -- Annual Distribution Requirements"), but is not subject to
Federal income tax in the hands of the Company provided that such income is
distributed by the Company to its stockholders. Moreover, for purposes of the
REIT asset tests (see "-- Requirements for Qualification -- Asset Tests"), the
Company includes its proportionate share of assets held by the Operating
Partnership.
ENTITY CLASSIFICATION
The Company's interest in the Operating Partnership involves special tax
considerations, including the possibility of a challenge by the Internal Revenue
Service (the "Service") of the status of the Operating Partnership as a
partnership (as opposed to an association taxable as a corporation) for Federal
income tax purposes. If the Operating Partnership were to be treated as an
association, it would be taxable as a corporation. In such a situation, the
Operating Partnership would be required to pay income tax at corporate rates on
its net income, and distributions to its partners would constitute dividends
that would not be deductible in computing net income. In addition, the character
of the Company's assets and items of gross income would change, which would
preclude the Company from satisfying the asset test and possibly the income
tests (see "-- Requirements for Qualification -- Asset Tests" and "-- Gross
Income Tests"), and in turn would prevent the Company from qualifying as a REIT.
See "-- Requirements for Qualification -- Failure to Qualify" above for a
discussion of the effect of the Company's failure to meet such tests for a
taxable year.
TAX ALLOCATIONS WITH RESPECT TO THE PROPERTIES
Pursuant to Section 704(c) of the Code, income, gain, loss and deduction
attributable to appreciated or depreciated property that is contributed to a
partnership in exchange for an interest in the partnership (such as certain of
the Properties), must be allocated in a manner such that the contributing
partner is charged with, or benefits from, respectively, the unrealized gain or
unrealized loss associated with the property at the time of the contribution.
The amount of such unrealized gain or unrealized loss is generally equal to the
difference between the fair market value of contributed property at the time of
contribution, and the adjusted tax basis of such property at the time of
contribution (a "Book-Tax Difference"). Such allocations are solely for Federal
income tax purposes and do not affect the book capital accounts or other
economic or legal arrangements among the partners. The Operating Partnership was
formed by way of contributions of appreciated property (including certain of the
Properties). Consequently, the partnership agreement of the Operating
Partnership requires such allocations to be made in a manner consistent with
Section 704(c) of the Code.
In general, the limited partners of the Operating Partnership will be
allocated lower amounts of depreciation deductions for tax purposes and
increased taxable income and gain on sale by the Operating
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<PAGE> 23
Partnership of the contributed assets (including certain of the Properties).
This will tend to eliminate the Book-Tax Difference over the life of the
Operating Partnership. However, the special allocation rules under Section
704(c) do not always entirely rectify the Book-Tax Difference on an annual basis
or with respect to a specific taxable transaction such as a sale. Thus, the
carryover basis of the contributed assets in the hands of the Operating
Partnership may cause the company to be allocated lower depreciation and other
deductions, and possibly greater amounts of taxable income in the event of a
sale of such contributed assets in excess of the economic or book income
allocated to it as a result of such sale. This may cause the Company to
recognize taxable income in excess of cash proceeds, which might adversely
affect the Company's ability to comply with the REIT distribution requirements.
See "-- Requirements for Qualification -- Annual Distribution Requirements." In
addition, the application of Section 704(c) to the Operating Partnership is not
entirely clear and may be affected by authority that may be promulgated in the
future.
SALE OF THE PROPERTIES
Generally, any gain realized by the Operating Partnership on the sale of
property held by the Operating Partnership for more than one year will be
long-term capital gain, except for any portion of such gain that is treated as
depreciation or cost recovery recapture. The Company's share of any gain
realized by the Operating Partnership on the sale of any dealer property
generally will be treated as income from a prohibited transaction that is
subject to a 100% penalty tax. See "-- Taxation of the Company" and "--
Requirements for Qualification -- Gross Income Tests -- The 95% Test." Under
existing law, whether property is dealer property is a question of fact that
depends on all the facts and circumstances with respect to the particular
transaction. The Operating Partnership intends to hold the Properties for
investment with a view to long-term appreciation, to engage in the business of
acquiring, developing, owning and operating the Properties, and to make such
occasional sales of the Properties as are consistent with the Company's
investment objectives. Based upon such investment objectives, the Company
believes that in general the Properties should not be considered dealer property
and that the amount of income from prohibited transactions, if any, will not be
material.
TAXATION OF STOCKHOLDERS
TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS
As long as the Company qualifies as a REIT, distributions made to the
Company's taxable domestic stockholders out of current or accumulated earnings
and profits (and not designated as capital gain dividends) will be taken into
account by them as ordinary income. Stockholders that are corporations will not
be entitled to a dividends received deduction. Distributions that are designated
as capital gain dividends will be taxed as long-term capital gains (to the
extent they do not exceed the Company's actual net capital gain for the taxable
year) without regard to the period for which the stockholder has held its stock.
However, corporate stockholders may be required to treat up to 20% of certain
capital gain dividends as ordinary income. To the extent that the Company makes
distributions in excess of current and accumulated earnings and profits, these
distributions are treated first as a tax-free return of capital to the
stockholder, reducing the tax basis of a stockholder's Common Stock by the
amount of such distribution (but not below zero), with distributions in excess
of the stockholders tax basis taxable as capital gains (if the Common Stock is
held as a capital asset). In addition, any dividend declared by the Company in
October, November or December of any year and payable to a stockholder of record
on a specific date in any such month shall be treated as both paid by the
Company and received by the stockholder on December 31 of such year, provided
that the dividend is actually paid by the Company during January of the
following calendar year. Stockholders may not include in their individual income
tax returns any net operating losses or capital losses of the Company.
In general, any loss upon a sale or exchange of Common Stock by a
stockholder who has held such stock for six months or less (after applying
certain holding period rules) will be treated as a long-term capital loss, to
the extent of distributions from the Company required to be treated by such
stockholder as long-term capital gains.
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BACKUP WITHHOLDING
The Company will report to its domestic stockholders and to the Service the
amount of dividends paid during each calendar year, and the amount of tax
withheld, if any, with respect thereto. Under the backup withholding rules, a
stockholder may be subject to backup withholding at the rate of 31% with respect
to dividends paid unless such stockholder (a) is a corporation or comes within
certain other exempt categories and, when required, demonstrates this fact, or
(b) provides a taxpayer identification number, certifies as to no loss of
exemption from backup withholding, and otherwise complies with applicable
requirements of the backup withholding rules. A stockholder that does not
provide the Company with its correct taxpayer identification number may also be
subject to penalties imposed by the Service. Any amount paid as backup
withholding will be creditable against the stockholder's income tax liability.
OTHER TAX CONSIDERATIONS
DIVIDEND REINVESTMENT PROGRAM
Under the Company's dividend reinvestment program, stockholders
participating in the program will be deemed to have received the gross amount
of any cash distributions which would have been paid by the Company to such
stockholders had they not elected to participate. These deemed distributions
will be treated as actual distributions from the Company to the participating
stockholders and will retain the character and tax effect applicable to
distributions from the Company generally. See "-- Taxation of Stockholders."
Participants in the dividend reinvestment program are subject to Federal income
tax on the amount of the deemed distributions to the extent that such
distributions represent dividends or gains, even though they receive no cash.
Shares of Common Stock received under the program will have a holding period
beginning with the day after purchase, and a tax basis equal to their cost
(which is the gross amount of the deemed distribution).
STATE AND LOCAL TAXES
The Company and its stockholders may be subject to state or local taxation
in various jurisdictions, including those in which it or they transact business
or reside. The state and local tax treatment of the Company and its stockholders
may not conform to the Federal income tax consequences discussed above.
Consequently, prospective stockholders should consult their own tax advisers
regarding the effect of state and local tax laws on an investment in the Common
Stock of the Company.
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PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale from time to time by the
holders thereof of up to 50,000 shares of Common Stock that may be issued by the
Company to the holders of up to 50,000 Units in the Operating Partnership, if
and to the extent such holders tender such Units for exchange into shares of
Common Stock. The Company has registered the Shares for sale pursuant to certain
registration rights agreements, but registration of such Shares does not
necessarily mean that any of such Shares will be issued by the Company, unless
required by the holders, or offered or sold by the holders thereof.
The Company will not receive any proceeds from the offering by the Selling
Stockholders or from the issuance of the Shares to holders of Units. The Shares
may be sold from time to time to purchasers directly by any of the Selling
Stockholders. Alternatively, the Selling Stockholders may from time to time
offer the Shares through dealers or agents, who may receive compensation in the
form of commissions from the Selling Stockholders and/or the purchasers of
Shares for whom they may act as agent. The Selling Stockholders and any dealers
or agents that participate in the distribution of Shares may be deemed to be
"underwriters" within the meaning of the Securities Act and any profit on the
sale of Shares by them and any commissions received by any such dealers or
agents might be deemed to be underwriting commissions under the Securities Act.
The distribution of the Shares also may be effected from time to time in one
or more underwritten transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Any such underwritten
offering may be on a "best efforts" or a "firm commitment" basis. In connection
with any such underwritten offering, underwriters or agents may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders or from purchasers of Shares for whom they may act as
agents. Underwriters may sell Shares to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents.
At a time a particular offer of Shares is made, a Prospectus Supplement, if
required, will be distributed that will set forth the name and names of any
dealers or agents and any commissions and other terms constituting compensation
from the Selling Stockholders and any other required information. The Shares may
be sold from time to time at varying prices determined at the time of sale or at
negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the Shares may be sold only through registered or licensed brokers
or dealers. In addition, in certain states, the Shares may not be sold unless
they have been registered or qualified for sale in such state or an exemption
from such registration or qualification requirement is available and is complied
with.
The Shares may also be sold in one or more of the following transactions:
(a) block transactions (which may involve crosses) in which a broker-dealer may
sell all or a portion of such stock as agent but may position and resell all or
a portion of the block as principal to facilitate the transaction; (b) purchases
by any such broker-dealer as principal and resale by such broker-dealer for its
own account pursuant to a Prospectus Supplement; (c) a special offering, an
exchange distribution or a secondary distribution in accordance with applicable
NYSE or other stock exchange rules; (d) ordinary brokerage transactions and
transactions in which any such broker-dealer solicits purchasers; (e) sales "at
the market" to or through a market maker or into an existing trading market, on
an exchange or otherwise, for such shares; and (f) sales in other ways not
involving market makers or established trading markets, including direct sales
to purchasers. In effecting sales, broker-dealers engaged by the Selling
Stockholders may arrange for other broker-dealers to participate.
The Company may from time to time issue up to 50,000 Shares upon the
acquisition of Units tendered for exchange. The Company will acquire the
exchanging holder's Unit in exchange for each Share that the
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Company issues in connection with such exchange. Consequently, with each
exchange, the Company's interest in the Operating Partnership will increase.
EXPERTS
The consolidated financial statements and related financial statement
schedule of the Company included in the Company's Annual Reports on Form 10-K
and Form 10-K/A for the year ended December 31, 1995 and incorporated by
reference herein, the combined statement of revenues and certain expenses for
the six acquired properties and two investments in mortgages included in the
Company's Current Report on Form 8-K dated June 18, 1996, incorporated by
reference herein, and the combined statements of revenues and certain expenses
for the City Portfolio included in the Company's Current Report on Form 8-K
dated July 15, 1996, incorporated by reference herein, have been audited by
Arthur Andersen LLP, independent public accountants, to the extent and for the
periods indicated in their reports and have been included or incorporated herein
in reliance on such reports given on the authority of that firm as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered pursuant
to this Prospectus will be passed upon for the Company by Morrison & Foerster
LLP, Palo Alto, California. In addition, the description of the Company's
qualification and taxation as a REIT under the Code contained in this Prospectus
under the caption entitled "Federal Income Tax Considerations -- General" is
based upon the opinion of Morrison & Foerster LLP.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated fees and expenses payable by
the Company in connection with the issuance and distribution of the Common Stock
registered hereby. All of such fees and expenses are estimates, except the
Securities Act registration fee.
<TABLE>
<S> <C>
Securities Act Registration Fee.. $ 486
Printing and duplicating fees.... 1,500
Legal fees and expenses.......... 20,000
Accounting fees and expenses..... 3,000
Miscellaneous expenses........... 5,014
-------
Total....................... $30,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article EIGHTH, Section 6 of the Charter of the Company limits the liability
of a director or officer to the Company or its stockholders for money damages to
the full extent permitted by Maryland law. No amendment of the Charter of the
Company shall limit or eliminate the right to this limitation of liability with
respect to acts or omissions occurring prior to such amendment or repeal.
Section 2-405.2 of the Corporations and Associations Article and Section 5-349
of the Courts and Judicial Proceedings Article of the Annotated Code of Maryland
permits the Company to limit the liability of a director or officer to the
Company or its stockholders for money damages, with certain limitations.
Article EIGHTH, Section 5 of the Charter of the Company provides
indemnification for a director or officer of the Company to the full extent
permitted by Maryland law. No amendment of the Charter of the Company shall
limit or eliminate the right to this indemnification with respect to acts or
omissions occurring prior to such amendment or repeal. Article IX of the Bylaws
of the Company contains provisions which implement the indemnification
provisions of the Charter. Section 2-418 of the Corporations and Associations
Article of the Annotated Code of Maryland permits (and in part requires) the
Company to provide information to a director or officer, with certain
limitations.
The Company has entered into indemnification agreements with each of the
directors and executive officers of the Company to provide them with
indemnification to the full extent permitted by the Charter and Bylaws of the
Company.
The Company has obtained an insurance policy to provide liability coverage
for directors and officers of the Company.
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<PAGE> 28
ITEM 16. EXHIBITS
3.1 -- Articles of Incorporation of Spieker Properties, Inc.
(incorporated by reference to Exhibit 3.1 to Spieker
Properties, Inc.'s Registration Statement on Form S-11 (File
No. 33-67906))
3.2 -- Articles of Amendment of Spieker Properties, Inc.
3.3 -- Articles Supplementary of Spieker Properties, Inc. for
Series A Preferred Stock (incorporated by reference to
Exhibit 4.2 to Spieker Properties, Inc.'s Report on Form
10-Q for the quarter ended March 31, 1994)
3.4 -- Articles Supplementary of Spieker Properties, Inc. for
Class B Common Stock (incorporated by reference to Exhibit
4.2 to Spieker Properties, Inc.'s Report on Form 10-Q for
the quarter ended March 31, 1995)
3.5 -- Articles Supplementary of Spieker Properties, Inc. for
Series B Preferred Stock (incorporated by reference to
Exhibit 3.5 to Spieker Properties, Inc.'s Annual Report on
Form 10-K for the year ended December 31, 1995)
3.6 -- Articles Supplementary of Spieker Properties, Inc. for
Class C Common Stock (incorporated by reference to Exhibit
3.6 to Spieker Properties, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1996)
3.7 -- Bylaws of Spieker Properties, Inc. (incorporated by
reference to Exhibit 3.2 to Spieker Properties, Inc.'s
Registration Statement on Form S-11 (File No. 33-67906))
5.1 -- Opinion of Morrison & Foerster LLP
8.1 -- Opinion of Morrison & Foerster LLP relating to certain
tax matters
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Morrison & Foerster LLP (included in Exhibit
5.1)
24.1 -- Power of Attorney (included on page II-4)
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) any deviation
from the low or high and of the estimated maximum offering price may be
reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
II-2
<PAGE> 29
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of these securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby further undertakes that, for the purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual reports pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference to this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance under Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 of this
registration statement, or otherwise (other than insurance), the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in such Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE> 30
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that is has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Menlo Park, State of California, on the 1st day of
August, 1996.
SPIEKER PROPERTIES, INC.
By: /s/ Craig G. Vought
-------------------
Craig G. Vought
Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Spieker Properties, Inc., do
hereby constitute and appoint Warren E. Spieker, Jr., Dennis E. Singleton, Craig
G. Vought and Adrian J. Gordon, and each of them, our true and lawful
attorneys-in-fact and agents, each with full power of substitution and
resubstitution, for each of us and in each of our names, places and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as each of us might
or could do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------------ ------------------------
<S> <C> <C>
/s/ Warren E. Spieker, Jr. Chairman of the Board, Director and Chief Executive August 1, 1996
- ----------------------------------- Officer (Principal Executive Officer)
Warren E. Spieker, Jr.
/s/ John K. French Director, Executive Vice President and Chief August 1, 1996
- ----------------------------------- Operating Officer
John K. French
</TABLE>
II-4
<PAGE> 31
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------- ---------------------------------------------------- -------------
<S> <C> <C>
/s/ Dennis E. Singleton Director, Executive Vice President and Chief August 1, 1996
- ----------------------------------- Investment Officer
Dennis E. Singleton
Vice President and Principal Accounting Officer , 1996
- ----------------------------------- (Principal Accounting Officer)
Elke Strunka
/s/ Craig G. Vought Executive Vice President and Chief Financial Officer August 1, 1996
- ----------------------------------- (Principal Financial Officer)
Craig G. Vought
/s/ Richard J. Bertero Director August 1, 1996
- -----------------------------------
Richard J. Bertero
Director , 1996
- -----------------------------------
Harold M. Messmer
/s/ David M. Petrone Director August 1, 1996
- -----------------------------------
David M. Petrone
/s/ William S. Thompson Director August 1, 1996
- -----------------------------------
William S. Thompson, Jr.
</TABLE>
II-5
<PAGE> 32
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
3.1 -- Articles of Incorporation of Spieker Properties, Inc. (incorporated by reference to Exhibit
3.1 to Spieker Properties, Inc.'s Registration Statement on Form S-11 (File No. 33-67906))
3.2 -- Articles of Amendment of Spieker Properties, Inc.
3.3 -- Articles Supplementary of Spieker Properties, Inc. for Series A Preferred Stock
(incorporated by reference to Exhibit 4.2 to Spieker Properties, Inc.'s Report on Form 10-Q
for the quarter ended March 31, 1994)
3.4 -- Articles Supplementary of Spieker Properties, Inc. for Class B Common Stock (incorporated
by reference to Exhibit 4.2 to Spieker Properties, Inc.'s Report on Form 10-Q for the
quarter ended March 31, 1995)
3.5 -- Articles Supplementary of Spieker Properties, Inc. for Series B Preferred Stock
(incorporated by reference to exhibit 3.5 to Spieker Properties, Inc.'s Annual Report on
Form 10-K for the year ended December 31, 1995)
3.6 -- Articles Supplementary of Spieker Properties, Inc. for class C Common Stock (incorporated
by reference to Exhibit 3.6 to Spieker Properties, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1996)
3.7 -- Bylaws of Spieker Properties, Inc. (incorporated by reference to Exhibit 3.2 to Spieker
Properties Inc.'s Registration Statement on Form S-11 (File No. 33-67906))
5.1 -- Opinion of Morrison & Foerster LLP
8.1 -- Opinion of Morrison & Foerster LLP relating to certain tax matters
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Morrison & Foerster LLP (included in Exhibit 5.1)
24.1 -- Power of Attorney (included on page II-4)
</TABLE>
<PAGE> 1
EXHIBIT 3.2
SPIEKER PROPERTIES, INC.
ARTICLES OF AMENDMENT
SPIEKER PROPERTIES, INC., a Maryland corporation, having its principal
office in the City of Baltimore, Maryland (the "Corporation"), hereby certifies
to the Maryland State Department of Assessments and Taxation that:
FIRST: The Charter of the Corporation is hereby amended as
follows:
1. Subparagraph (a)(9) of Article NINTH is amended to read in
its entirety as follows:
Exception. The Board of Directors, upon receipt of a ruling
from the Internal Revenue Service or an opinion of counsel in each case to the
effect that the restrictions contained in subparagraph (a)(2)(C) and/or
subparagraph (a)(2)(D) will not be violated, may exempt (i) a Person from the
Ownership Limit if such Person is not an individual for purposes of Section
542(a)(2) of the Code (as modified by Section 856(h) of the Code) or (ii) is an
underwriter which participates in a public offering of the Equity Stock for a
period of 90 days following the purchase by such underwriter of the Equity Stock
and the Board of Directors obtains such representations and undertakings from
such Person as are reasonably necessary to ascertain that no individual's
Beneficial Ownership of Equity Stock will violate the Ownership Limit and such
Person agrees that any violation or attempted violation will result in such
Equity Stock being exchanged for Excess Stock in accordance with subparagraph
(a)(3) of this Article NINTH and provided that any exemption of a Person under
clause (i) of this subparagraph shall not allow the Person to exceed 13.0% of
the value of the outstanding Equity Stock of the Corporation.
2. Subparagraph (b)(1) of Article NINTH is amended to read in
its entirety as follows:
Ownership in Trust. Upon any purported Transfer that results
in Excess Stock pursuant to subparagraph (a)(3) of this Article NINTH, such
Excess Stock shall be deemed to have been transferred to the Corporation, as
Trustee of a Trust for the Exclusive benefit of such Beneficiary or
Beneficiaries to whom an interest in such Excess Stock may later be transferred
pursuant to subparagraph (b)(5). Shares of Excess Stock so held in trust shall
be issued and outstanding stock of the Corporation. The Purported Record
Transferee shall have no rights in such Excess Stock except the right to receive
a price for its interest in the shares of Equity Stock which were exchanged for
Excess Stock. The Purported Beneficial Transferee shall have no rights in such
Excess Stock except as provided in subparagraph (b)(5).
3. Subparagraphs (b)(5)(A) and (b)(5)(B) of Article NINTH are
amended to read in their entirety as follows:
Restrictions on Transfer; Designation of Beneficiary.
(A) Excess Stock shall not be transferable. The Corporation
may designate a Beneficiary of an interest in the Trust (representing the number
of shares of Excess Stock held by the Trust attributable to a purported Transfer
that resulted in the Excess Stock), if the shares of Excess
1
<PAGE> 2
Stock held in Trust would not be Excess Stock in the hands of such Beneficiary.
The Purported Beneficial Transferee may receive a price for its interest in the
shares of Equity Stock which were exchanged for Excess Stock provided that the
Purported Beneficial Transferee does not receive a price that reflects a price
per share for such Equity Stock that exceeds (i) the price per share such
Purported Beneficial Transferee paid for the Equity Stock in the purported
Transfer that resulted in the Excess Stock, or (ii) if the Purported Beneficial
Transferee did not give value for such shares of Equity Stock (through a gift,
devise or otherwise), a price per share equal to the Market Price on the date of
the purported Transfer that resulted in the Excess Stock. Upon such transfer of
an interest in the Trust, the corresponding shares of Excess Stock in the Trust
shall be automatically exchanged for an equal number of shares of Equity Stock,
and such shares of Equity Stock shall be transferred of record to the
Beneficiary of the interest in the Trust designated by the Corporation as
described above if such Equity Stock would not be Excess Stock in the hands of
such Beneficiary.
(B) Notwithstanding the foregoing, if a Purported Beneficial
Transferee receives a price for its interest in the shares of Equity Stock which
were exchanged for Excess Stock that exceeds the amounts allowable under
subparagraph (b) (5) (A) of this Article NINTH, such Purported Beneficial
Transferee shall pay, or cause to be paid, such excess to the Corporation, or,
at the Corporation's sole election, such excess shall be offset against any
future dividends or distributions payable to such Purported Beneficial
Transferee.
4. Subparagraph (b)(3) of Article NINTH is amended to read in
its entirety as follows:
Rights upon Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution, or winding up of, or any distribution of
the assets of, the Corporation, the shares of Excess Stock shall not be entitled
to share in any portion of the assets of the Corporation. At such time as (i)
the Corporation has received the necessary stockholder approval with respect to
a voluntary liquidation or dissolution of the Corporation, or (ii) the
Corporation has become the subject of an order of a court of competent
jurisdiction compelling an involuntary liquidation or dissolution of the
Corporation, such shares of Excess Stock held in Trust shall without further act
be extinguished and each Purported Beneficial Transferee whose acquisition of
Equity Stock resulted in the Excess Stock which has been extinguished pursuant
to this subparagraph (b) (3) of this Article NINTH shall without further act
become a creditor of the Corporation. The amount by which each such Purported
Beneficial Transferee shall become a creditor of the Corporation with respect to
its now-extinguished interest in the Trust (representing the number of shares of
Excess Stock held by the Trust attributable to a purported Transfer that
resulted in the Excess Stock) will be equal to the lesser of (a) that amount of
the distributable assets of the Corporation to which such Excess Stock would be
entitled if such Excess Stock were entitled to share ratably in the
distributable assets of the Corporation as shares of Common Stock, or (b) as
appropriate, either (1) the price per share paid by such Purported Beneficial
Transferee for the shares of Equity Stock which were exchanged for Excess Stock,
or (2) if the Purported Beneficial Transferee did not given value for such
shares of Equity Stock (having received such through a gift, device or
otherwise), a price per share equal to the Market Price on the date of the
purported Transfer that resulted in the Excess Stock. Payment to the Purported
Beneficial Transferee shall be without interest and shall be due concurrently
with the date of first distribution of liquidation proceeds to the holders of
Equity Stock. If the Corporation causes such liquidation or dissolution to be
revoked or otherwise rescinded any Excess Stock previously automatically
extinguished pursuant to this subparagraph (b) (3) of this Article NINTH
2
<PAGE> 3
shall be automatically revived and any Purported Beneficial Transferees shall
without further act cease to be creditors of the Corporation as otherwise
provided above.
SECOND. The foregoing amendments to the Charter of the
Corporation have been approved by the shareholders of the Corporation at the
Annual Meeting held on May 22, 1996.
IN WITNESS WHEREOF, SPIEKER PROPERTIES, INC. has caused these
present to be signed in its name and on its behalf by its Chairman of the Board
and Chief Executive Officer and witnessed by its Chief Financial Officer and
Executive Vice President on June 17, 1996.
ATTEST: SPIEKER PROPERTIES, INC.
/s/ Craig G. Vought By: /s/ Warren E. Spieker
- ------------------------------------------ -------------------------------
Craig G. Vought Warren E. Spieker, Jr.
Chief Financial Officer and Executive Vice Chairman of the Board and
President Chief Executive Officer
THE UNDERSIGNED, Chairman of the Board and Chief Executive Officer of
SPIEKER PROPERTIES, INC., who executed on behalf of the Corporation the Articles
of Amendment of which this certificate is made a part, hereby acknowledges in
the name and on behalf of said Corporation the foregoing Articles of Amendment
to be the corporate act of said Corporation and hereby certifies that the
matters and facts set forth herein with respect to the authorization and
approval thereof are true in all material respects under the penalties of
perjury.
/s/ Warren E. Spieker
------------------------------
Warren E. Spieker, Jr.
3
<PAGE> 1
EXHIBIT 5.1
August 1, 1996
Spieker Properties, Inc.
2180 Sand Hill Road, Suite 200
Menlo Park, California 94025
Dear Sirs:
We are acting as counsel to Spieker Properties, Inc., a Maryland
corporation (the "Company"), in connection with the offer and sale from time to
time by the holders of up to 50,000 shares (the "Shares") of common stock, par
value $.0001 per share ("Common Stock"), that may be issued by Spieker
Properties, Inc. (the "Company") to certain holders of up to 50,000 units of
limited partnership interest (the "Units") in Spieker Properties, L.P. (the
"Operating Partnership"), of which the Company is the sole general partner and
owns a controlling interest, if and to the extent that such holders tender such
Units for exchange into shares of Common Stock. The Shares are the subject of a
Registration Statement (the "Registration Statement") filed by the Company on
Form S-3 under the Securities Act of 1933, as amended.
In our capacity as your counsel in connection with such registration,
we are familiar with the proceedings taken and proposed to be taken by the
Company in connection with the authorization and issuance of the Shares and for
the purposes of this opinion, have assumed such proceedings will be timely
completed in the manner presently proposed. In addition, we have made such legal
and factual examinations and inquiries, including an examination of originals or
copies certified or otherwise identified to our satisfaction of such documents,
corporate records and instruments, as we have deemed necessary or appropriate
for purposes of this opinion.
Based upon and subject to the foregoing and to the assumptions,
limitations and conditions set forth herein, we are of the opinion that upon the
issuance of the Shares as described in the Registration Statement, the Shares
will be validly issued, fully paid and non-assessable.
<PAGE> 2
Spieker Properties, Inc.
August 1, 1996
Page 2
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the reference to us under the heading "Legal
Matters" in the Registration Statement, the Prospectus constituting a part
thereof and any amendments thereto.
Very truly yours,
Morrison & Foerster LLP
<PAGE> 1
EXHIBIT 8.1
August 1, 1996
Spieker Properties, Inc.
Spieker Properties, L.P.
2180 Sand Hill Road, Suite 200
Menlo Park, California 94025
Ladies and Gentlemen:
We are acting as counsel to Spieker Properties, Inc., a
Maryland corporation (the "Company") in connection with the offer and sale from
time to time by the holders of up to 50,000 shares (the "Shares") of common
stock, par value $.0001 per share ("Common Stock"), that may be issued by
Spieker Properties, Inc. (the "Company") to certain holders of up to 50,000
units of limited partnership interest (the "Units") in Spieker Properties, L.P.
(the "Operating Partnership"), of which the Company is the sole general partner
and owns a controlling interest, if and to the extent that such holders tender
such Units for exchange into shares of Common Stock. The Shares are the subject
of a Registration Statement (the "Registration Statement") filed by the Company
on Form S-3 under the Securities Act of 1933, as amended (the "Act"). We have
been requested to provide you with our opinion as to whether the Company
currently qualifies as a real estate investment trust ("REIT"), within the
meaning of Section 856(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and has so qualified for each of the past three taxable years.
Capitalized terms not otherwise defined herein shall have the meaning given to
them in the Registration Statement.
For purposes of the opinion set forth below, we have relied,
with your consent, upon the accuracy and completeness of the statements and
representations (which statements and representations we have neither
investigated nor verified) contained in the
<PAGE> 2
Spieker Properties, Inc.
August 1, 1996
Page 2
certificate of the Company dated July 29, 1996 (the "Certificate"). We have also
relied upon the accuracy of the Registration Statement.
Based upon such statements, representations and assumptions,
and subject to, the next two succeeding paragraphs, we are of the opinion that,
as of the date hereof and for its taxable years ended December 31, 1993,
December 31, 1994 and December 31, 1995, the Company has operated in a manner
that has qualified it as a REIT under the Code, and if it continues to operate
in the same manner, it will continue to so qualify.
Our opinion is based upon the documents referred to above and
the current provisions of the Code, Treasury Regulations promulgated thereunder,
published pronouncements of the Internal Revenue Service and case law, any of
which may be changed at any time, possibly with retroactive effect. You should
also be aware that opinions of counsel are not binding upon the Internal Revenue
Service or the courts. Any change in applicable law, or any inaccuracy in the
statements, representations and assumptions on which we have relied may affect
the continuing validity of the opinion set forth herein.
This opinion addresses only the operation of the Company in a
manner that qualifies it as a REIT as of the date hereof and during each of the
past three taxable years. We undertake no obligation to update this opinion, or
to ascertain after the date hereof whether circumstances occurring after such
date may affect the conclusions set forth herein.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. In giving this consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7
of the Act.
Very truly yours,
Morrison & Foerster LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-3 and related Prospectus of Spieker
Properties, Inc. (the "Company") for the registration of shares of the Company's
common stock which may be issued upon conversion of certain units of interest in
Spieker Properties, L.P., and sold from time to time by the holders of such
shares of common stock.
We also consent to the incorporation by reference to our report dated
January 25, 1996, with respect to the consolidated financial statement and
schedule of the Company, which report is included in the Company's Annual
Reports on Form 10-K and Form 10-K/A (Amendment No. 1) for the year ended
December 31, 1995 and incorporated by reference in the Registration Statement.
We also consent to the incorporation by reference of our report dated
June 14, 1996 on the combined statement of revenues and certain expenses for the
six acquired properties and two investments in mortgages, which report is
included in the Company's Current Report on Form 8-K dated June 18, 1996 and
incorporated by reference in the Registration Statement.
We also consent to the incorporation by reference of our report dated
July 11, 1996 on the combined statements of revenues and certain expenses for
The City Portfolio, which report is included in the Company's Current Report on
Form 8-K dated July 15, 1996 and incorporated by reference in the Registration
Statement.
San Francisco, California ARTHUR ANDERSEN LLP
July 29, 1996
